William M. Briggs

Statistician to the Stars!

Privatization Kills?: Or, Doctors Under Government Control Save More Lives?

Quick, answer this without thinking: which is better for your health, living under a communist regime or a capitalist system?

If you said “communist”, may I wager you’re an academic? Now read this, the first part of an opening sentence to a peer-reviewed paper in The Lancet:

The transition from communism to capitalism in Europe and central Asia during the early to mid-1990s has had devastating consequences for health:

The paper is “Mass privatisation and the post-communist mortality crisis: a cross-national analysis” by David Stuckler, Lawrence King, and Martin McKee (DOI:10.1016/S0140-6736(09)60005-2). Note carefully the word “crisis.” The The University of Oxford’s PR department summarizes the work:

As many as one million working-age men died due to the economic shock of mass privatisation policies followed by post-communist countries in the 1990s,

The gist is that the “shock treatment” of switching from a system where government controlled everything and where “everybody” was “employed”, to one of (more or less) freedom caused the (indirect) slaughter of a whole bunch of folks.

Stuckler and co. relied partly on a data source about which other authors say1 “This series is largely free from the distortions introduced to the published data during the Soviet period to disguise mortality from cholera, plague, suicide, homicide, and work accidents.” “Largely free” is not free; therefore any subsequent analysis which uses this data without considering the error and uncertainty inherent in the data, will itself be too sure of itself. Stuckler did not account for this uncertainty.

In order to create the paper’s stunningly counter-intuitive findings, besides the iffy data, the authors relied on a complex statistical model, which was composed of certain assumptions. One was inclusion of the “European Bank for Reconstruction and Development (EBRD) small-scale privatisation index”, a scale from 1 to 4.3, where e.g. 3 meant “Comprehensive programme almost ready for implementation” and 4 was “Complete privatisation of small companies with tradeable ownership rights.”

They also used the “EBRD large-scale privatisation index”, which is also subjectively defined. Then their own “Mass privatisation” indicator, which was positive when a “Country implemented a programme that transferred the ownership of at least 25% of large state-owned enterprises to the private sector through vouchers and give-aways to firm insiders.”

Amusingly, not only do they assume the data sacrosanct, they treat the “Mass privatisation” indicator and other scales as being unambiguous, definitions which every human being would agree to and which are measured without error in each of several countries2. Their model was this:

stuckler

AMR is “logged adult male standardised mortality rates” and where, for example, “DEM is the democratisation index, WAR is a dummy for military conflict, EDUC is the percentage of population with tertiary education, URBAN is the percentage of the population living in urban settings, DEP is the population dependency ratio”3. Statisticians call this kind of model “the kitchen sink”, whereby everything a researcher can think of is thrown in with the hope that something clogs the drain.

Things stuck in this one, in the sense Stuckler saw wee p-values pop out of his equation for PRIV, the privatization measure (the measure is plural; the authors created more than one, but they never adjusted for multiple testing). He also found that unemployment increased with the collapse of communism, and that this unemployment contributed to corpses. This finding depends on the definition of “employment.” Under tyranny, everybody had their name on the roles, near 100% employment; under freedom, people found jobs instead, with unemployment now a non-negative number.

All results are purely statistical. The authors admit “This study has not examined how privatisation and unemployment led to illness.” Well, maybe they don’t.

Yours Truly is not the only skeptic of this curious paper. John Earle and Scott Gehlbach of Upjohn attempted to replicate the study but could not. In a letter to Lancet (same issue), the pair wrote, “We attempted to replicate [Stuckler’s] results and found that the relationship is not robust.” They ran three robustness checks, changing the original paper’s assumptions along plausible lines. They “demonstrate that any one of these changes substantially weakens the positive correlation between privatisation and mortality reported by Stuckler and colleagues, and a combination of any two changes eliminates it entirely.” They also ask, “does privatisation in fact lead to substantial job loss? My coauthors and I have found that the answer is a clear ‘no’.”

Even accepting the data, it is not unlikely the enormous societal upheavals which took place from pre- to post-tyranny could cause premature deaths. (The authors speculate booze and pills took their tolls.) If that’s so, then all this paper proves is that we can chalk up a few more hundred thousand to communism’s already astonishing body count.

Addendum Their conclusion is that “Great caution should be taken when macroeconomic policies seek radically to overhaul the economy without considering potential effects on the population’s health.” I’ll make another bet with you: the trio who penned these words were in favor of Obamacare. Irony, irony everywhere!

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1Leon DA, Chenet L, Shkolnikov VM, et al. Huge variation in Russian mortality rates 1984–94: artefact, alcohol, or what? Lancet 1997; 350: 383–88.

2Don’t laugh. This practice is so common with economists and sociologists that nobody questions it anymore.

3All of which falsely supposed to be measured without error, and similarly across each country (giggle).

Thanks to Sam Schulman (@Sam_Schulman) for suggesting this topic.

11 Comments

  1. The untold part is that communism could no longer pay for health care, since it went into bankruptcy (it wasn’t a decision to switch to capitalism, communism imploded). So should capitalism be taken as responsible, when it was there to pick up the broken parts of the health system? I would argue that capitalism saved a situation that could have gone even worse.

  2. I noticed the word “crisis”. I urge people to consider any supposed research paper containing such words as “crisis” as not part of science. Scientists do not use words like crisis that have no clear meaning. If it were a true research paper, the title should have been “Mass privatisation and the post-communist mortality rate: a cross-national analysis”.
    Research heads more and more into creating “reality” rather than seeking to understand it. I find it sad.

  3. Listen, they used Greek letters in their model specification. This proves that they are educated and therefore much smarter than the rest of us. Had they used lower case ‘a’ instead no-one would have taken them seriously. As it is …

  4. Although both papers employ multivariate longitudinal regression model, Stuckler, King & McKee use data from countries of eastern Europe and the former Soviet Union (FSU), and Earle and Gehlbach use only FSU and recompute the mass-privatization measure. With different explanatory variables and data, it’s really no surprise that they could ascertain different conclusions, hence the robust issue.

    This is not to say that the model or the analysis method would be of my choice. I might consider a mixed model, for example, a random (instead of fixed) country effect for the term \mu_i.

  5. “… and that this unemployment contributed to corpses. This finding depends on the definition of “employment”
    The result also would seem to depend on the definition of corpse:
    “This series is largely free from the distortions introduced to the published data during the Soviet period to disguise mortality from cholera, plague, suicide, homicide, and work accidents.” Apparently Soviet era reports tended to underreport them. So, surprise, now the same number of actual corpses looks like more.

  6. If I recall corectly, the average male life expectancy in the USSR was 55 years. That socialized medicine sure was wonderful. Of course the health statistics out of the USSR were fake, like their economic statistics. After the collapse they admitted the statistics were fiction.

  7. Sander van der Wal

    14 January 2013 at 4:26 pm

    Given that the mortality rates for both men and women in the USA are among the highest of the wealthy countries, there’s more to the issue than just Capitalism or Communism: https://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=13497.

  8. But this paper has math, so it must be true.

  9. Consider the source and quality of data: mortality under communism was always low. That was an ideological imperative, stupid !

  10. Sander van der Wal
    Given that what you link is from the The National Academies I take it as an a bucket of spit. The problem with that study and most like is is the US in not a collection of like people, and also we have do allow an individuals a wide choice of life style. Compare the rest of the world with Utah and you will find the National Academies study that bucket of stuff. Utah as as a group will stand as high as any country for life expectancy.

    Personally I know what personal choices can make. My father passed away at sixty five. He had six siblings only one other has passed away, it was a younger sister she died in her eighties. The rest are alive and all are in their late seventies or eighties and the oldest is ninety. My dads father passed away at ninety seven. The reason that my dad died at sixty five was he smoked, his father and siblings did not. Choices do make a difference, and if you are a progressive or a liberal and is working to take those choice away. I can only hope you xxxxxxxxxxxx since person choices are just that and no one needs someone else tell them to how and what choice they make in their personal lives.

    I loved my father dearly but it was his choice to smoke or not, just like it was his choice to live where he did. He could have done better else where but I will not trade my childhood for any others since I grew up in a unique place and time. All of which has been destroyed by liberals and their warped ideas, but that another story.

    Edited

  11. Oohhh… Look! The “model”: A Drake equation!

    Or something equally as useful and founded on sound theory.

    Old people are an inconvenience to communists. Those “unproductive units” are a real burden on the “machinery” of a planned economy.

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